NZ insurers fret over gadgets

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The rising popularity of high-priced mobile phones, notebook
computers and MP3 players is starting to hit the hip pocket of New
Zealand insurance firms, which are now forking out millions of
dollars for lost and broken gadgets.

Tower senior technical manager for general insurance Allan Black
says the firm deals with many of these claims which are increasing
in volume and value daily.

He says Tower pays out "in excess of $NZ750,000 ($A690,934) per
annum and rising" in claims for portable electronics.

Alan Perry, executive manager of AMI, says there has been a
substantial increase in the number of claims for cellphones and
their cost.

More New Zealanders than ever carry high value electronics.

The number of mobile phones has doubled in the past five years
and more than 260,000 notebooks were sold in 2003 and 2004.

The number of mp3 players nearly doubled last year, rising to
217,000.

About 1600 mobiles are reported lost or stolen every month in
New Zealand, according to figures from Telecom and Vodafone.

Assuming an average price of $NZ250 per phone, this tallies to
$NZ4.8 million in lost and stolen mobile phones every year.

Some of the phones reported as lost or stolen will be found or
recovered.

While claims for mobile phones and other portable electronics
are unlikely to trigger rises in insurance premiums on their own,
Mr Black says they would be considered when premiums are set.

"Any increase in our claims spend is a worry and in due course
would be reflected in our premiums," he says.

Mr Perry says many school-aged children and teenagers now have
cellphones, adding to the insurance risk. Another concern with
cellphones is that the electronics can fail and they can just stop
working without being damaged.

Some unscrupulous people then damage their phones on purpose to
claim insurance for a replacement. Others intentionally damage
working mobiles to pay for an upgrade.

"People want to move from one type of phone to a later model and
attempt to do so via their insurance policy," says Mr Perry.

IAG, which owns State and NZI, isn't concerned the loss and
theft of portable electronics will drive up its premiums.

"We don't see any trends that point towards premium
adjustments," says spokeswoman Adrienne Collins. "This is because
the technology remains relatively inexpensive to replace."

Handheld electronics and computers are covered under IAG's
standard home contents policy, as long as customers take reasonable
care to avoid breakage, loss and theft.

Tower will replace electronic equipment that is less than a year
old, generally with products sourced through preferred suppliers at
discounted prices.

AMI's policies vary from replacement with no time limits to
paying the purchase cost minus depreciation.

If computers are less than five years old IAG pays out the
replacement value, otherwise it will pay only their market
value.

"Replacement" for IAG means replacing the item with one of
equivalent capability and quality. So for a two-year-old mobile,
the replacement value will be much less than what was paid two
years ago.